~ Net Sales Increased 32.6% to $113.2 Million from $85.4 Million Last Year ~~ Operating Income of $5.0 Million vs. Operating Loss of $2.2 Million Last Year ~~ Reaffirms Full Year Guidance ~~ Board Declares Quarterly Dividend ~

PARAMUS, N.J., Sept. 1, 2011 /PRNewswire via COMTEX/ --

Movado Group, Inc. (NYSE: MOV) today announced second quarter results for the period ended July 31, 2011. The Company completed the closure of its boutiques on June 30, 2010 and results for the boutiques for all periods are reported as discontinued operations. All financial results in this press release are for continuing operations unless otherwise stated.

Efraim Grinberg, Chairman and Chief Executive Officer, stated, "We are very pleased with our second quarter and year-to-date performance. Our strategic initiatives coupled with solid execution have continued to benefit our results as we recorded another period of double-digit sales growth while also increasing our profitability. While we experienced broad-based sales growth across all of our brand categories, our results continue to be driven by particularly strong performances in Movado and licensed brands both domestically and internationally. We believe that the global recognition and acceptance of our brands further validates that we have the right strategy, products and team in place."

Second Quarter Fiscal 2012

Net sales in the second quarter of fiscal 2012 increased 32.6% to $113.2 million compared to $85.4 million in the second quarter of fiscal 2011 driven by growth in every brand category. On a constant dollar basis, net sales increased 25.5% compared to the prior year period.

Gross profit in the second quarter of fiscal 2012 was $60.9 million, or 53.8% of sales, compared to $44.4 million, or 52.0% of sales, in the second quarter last year. The increase in gross margin percentage is primarily the result of leverage gained on certain fixed costs as well as a favorable shift in channel and product mix. During the second quarter of fiscal 2012, $0.8 million of excess movements were sold as part of the Company's inventory reduction initiative and unfavorably impacted gross margin by 40 basis points.

Operating expenses increased $9.3 million, or 20.0%, to $55.9 million compared to $46.6 million in the second quarter last year. This increase was primarily the result of higher marketing expense to drive sales growth and higher compensation expense resulting from salary increases, the reinstatement of certain employee benefits and performance-based compensation. In addition, there was an increase due to unfavorable foreign currency exchange rates in translating foreign subsidiary results.

Operating income increased to $5.0 million in the second quarter of fiscal 2012 compared to operating loss of $2.2 million in the same period last year.

The Company recorded a tax provision in the second quarter of fiscal 2012 of $0.9 million, which equates to an effective tax rate of 16.0%. The effective tax rate for the quarter was impacted by the application of guidelines related to accounting for income taxes in interim periods.

Income from continuing operations was $4.4 million, or $0.18 per diluted share, in the second quarter of fiscal 2012 compared to loss from continuing operations of $3.2 million, or $0.13 per diluted share, in the second quarter of fiscal 2011.

Income from continuing operations for the second quarter of fiscal 2012 includes a $0.7 million, or $0.02 per diluted share, pre-tax gain from the sale of a building.

Net income for the second quarter of fiscal 2012 was $4.4 million, or $0.18 per diluted share, compared to net loss for the second quarter of fiscal 2011 of $20.9 million, or $0.84 per diluted share, including the results of discontinued operations of $17.7 million, or $0.72 per diluted share.

EBITDA in the second quarter of fiscal 2012 increased to $8.0 million compared to EBITDA of $1.5 million in the second quarter of fiscal 2011.

First Half Fiscal 2012

Net sales in the first six months of fiscal 2012 increased 28.4% to $203.1 million compared to $158.2 million in the same period of fiscal 2011 driven by growth in every brand category. On a constant dollar basis net sales increased by 23.1% compared to the prior year period.

Gross profit was $109.6 million, or 54.0% of sales, compared to $82.9 million, or 52.4% of sales in the same period last year. The increase in gross margin percentage is primarily the result of leverage gained on certain fixed costs as well as a favorable shift in channel and product mix. Additionally, the sale of excess movements discussed above unfavorably impacted gross margin by 20 basis points for the six months ended July 31, 2011.

Operating expenses increased $12.7 million, or 14.1%, to $103.0 million versus $90.2 million in the same period last year. This increase was primarily the result of higher marketing expense to drive sales growth and higher compensation expense resulting from salary increases, the reinstatement of certain employee benefits and performance-based compensation. In addition, there was an increase due to unfavorable foreign currency exchange rates in translating foreign subsidiary results.

Operating income increased to $6.6 million in the first six months of fiscal 2012 compared to operating loss of $7.3 million in the same period last year.

The Company recorded a tax provision in the first six months of fiscal 2012 of $1.6 million, which equates to an effective tax rate of 23.8%. The effective tax rate for the first six months was impacted by the application of guidelines related to accounting for income taxes in interim periods.

Income from continuing operations was $4.9 million, or $0.19 per diluted share, in the first six months of fiscal 2012 compared to loss of $9.6 million, or $0.39 per diluted share, in the same period last year.

Income from continuing operations for the first six months of fiscal 2012 includes a $0.7 million, or $0.02 per diluted share, pre-tax gain from the sale of a building in the second quarter of fiscal 2012.

Net income for the first six months of fiscal 2012 was $4.9 million, or $0.19 per diluted share, compared to net loss for the first six months of fiscal 2011 of $33.3 million, or $1.35 per diluted share, including the results of discontinued operations of $23.7 million, or $0.96 per diluted share.

EBITDA in the first six months of fiscal 2012 was $12.5 million compared to a EBITDA loss of $0.1 million in the same period of fiscal 2011.

Rick Cote, President and Chief Operating Officer, stated, "Our brands continue to experience solid customer and consumer demand, which helped drive our second quarter sales increase of 33% compared to the prior year period. Our strong sales growth more than offset the impact of currency and cost increases on gross margin. We are also very pleased to have achieved operating income of $5.0 million and EBITDA of $8.0 million in the second quarter while maintaining a strong balance sheet. These improved results continue to reflect the positive impact of our strategic initiatives and further underscore the recent momentum in our business. Considering the increased level of uncertainty of the global macro-economic environment, we are maintaining our guidance for the year. We remain confident in our portfolio of iconic brands and our position in the watch category."

Fiscal 2012 Guidance

The Company also reiterated its prior guidance for fiscal 2012 and continues to anticipate that EBITDA will range between $31.5 million and $33.5 million in fiscal 2012. The Company continues to anticipate net income in the range of $15.0 million to $16.5 million, or $0.60 to $0.65 per diluted share, with a tax rate that is expected to range between 10% and 15%. The Company's guidance still assumes no unusual charges for fiscal 2012.

Quarterly Dividend

The Company also announced that on September 1, 2011 the board of directors approved the payment on September 26, 2011 of a cash dividend in the amount of $0.03 for each share of the Company's outstanding common stock and class A common stock held by shareholders of record as of the close of business on September 12, 2011.

Conference Call

The Company's management will host a conference call today, September 1st at 10:00 a.m. Eastern Time. A live broadcast of the call will be available on the Company's website: www.movadogroup.com. This call will be archived online within one hour of the completion of the conference call.

In this release, the Company presents certain adjusted financial measures that are not calculated according to generally accepted accounting principles in the United States ("GAAP"). Specifically, the Company is presenting EBITDA which is calculated as the sum of the Company's GAAP operating income plus the amount of the Company's depreciation and amortization. The Company believes that EBITDA is useful as a performance measure since it gives investors a measure of the Company's ability to generate cash to service its debt and other cash expenditures. This non-GAAP financial measure is designed to complement the GAAP financial information presented in this release. The non-GAAP financial measure presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measure.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as "expects," "anticipates," "believes," "targets," "goals," "projects," "intends," "plans," "seeks," "estimates," "may," "will," "should" and similar expressions. Similarly, statements in this press release that describe the Company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements and levels of future dividends to differ materially from those expressed in, or implied by, these statements. These risks and uncertainties may include, but are not limited to general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets where the Company's products are sold, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks or natural disasters and the impact on consumer spending, changes in consumer preferences and popularity of particular designs, new product development and introduction, competitive products and pricing, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier's inability to fulfill the company's orders, the loss of or curtailed sales to significant customers, the Company's dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the continuation of licensing arrangements with third parties, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, the continued availability to the Company of financing and credit on favorable terms, business disruptions, disease, general risks associated with doing business outside the United States including, without limitation, import duties, tariffs, quotas, political and economic stability, and success of hedging strategies with respect to currency exchange rate fluctuations, and the other factors discussed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time. The Company assumes no duty to update its forward looking statements and this release shall not be construed to indicate the assumption by the Company of any duty to update its guidance in the future.

(Tables to follow)

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

Three Months Ended

July 31,

Six Months Ended

July 31,

2011

2010 (1)

2011

2010 (1)

Continuing Operations:

Net sales

$113,231

$85,388

$203,085

$158,192

Cost of sales

52,285

40,977

93,516

75,282

Gross profit

60,946

44,411

109,569

82,910

Selling, general and administrative expenses

55,932

46,607

102,975

90,249

Operating income / (loss)

5,014

(2,196)

6,594

(7,339)

Other income (2)

747

-

747

-

Interest expense

(315)

(676)

(698)

(1,348)

Interest income

17

27

46

54

Income / (loss) from continuing operations before income taxes

5,463

(2,845)

6,689

(8,633)

Provision for income taxes

875

375

1,590

792

Income / (loss) from continuing operations

4,588

(3,220)

5,099

(9,425)

Discontinued Operations:

Loss from discontinued operations, net of tax

-

(17,703)

-

(23,675)

Net income / (loss)

4,588

(20,923)

5,099

(33,100)

Less: income / (loss) attributed to noncontrolling interests

180

(15)

200

207

Net income / (loss) attributed to Movado Group, Inc.

$4,408

($20,908)

$4,899

($33,307)

Income / (loss) attributable to Movado Group, Inc.:

Income / (loss) from continuing operations, net of tax

$4,408

($3,205)

$4,899

($9,632)

Loss from discontinued operations, net of tax

-

(17,703)

-

(23,675)

Net income / (loss)

$4,408

($20,908)

$4,899

($33,307)

Per Share Information:

Income / (loss) from continuing operations attributed to Movado Group Inc.

$0.18

($0.13)

$0.19

($0.39)

Loss from discontinued operations

$0.00

($0.72)

$0.00

($0.96)

Net income / (loss) attributed to Movado Group, Inc.

$0.18

($0.84)

$0.19

($1.35)

Weighted diluted average shares outstanding

25,185

24,747

25,140

24,709

(1) Effective February 1, 2011, the Company changed its method of valuing its U.S. inventory to the average cost method. The comparative consolidated financial statements of the prior year have been adjusted to apply the new accounting method retroactively.

(2) The Company recorded a pre-tax gain for the sale of a building in the current period ending July 31, 2011.

MOVADO GROUP, INC.

RECONCILIATION TABLES

(in thousands)

(Unaudited)

Three Months Ended

July 31,

Six Months Ended

July 31,

2011

2010 (1)

2011

2010 (1)

Continuing Operations:

Operating income / (loss) (GAAP)

$5,014

($2,196)

$6,594

($7,339)

Depreciation and amortization

2,957

3,700

5,900

7,221

EBITDA (non-GAAP)

$7,971

$1,504

$12,494

($118)

(1) Effective February 1, 2011, the Company changed its method of valuing its U.S. inventory to the average cost method. The comparative consolidated financial statements of the prior year have been adjusted to apply the new accounting method retroactively.

MOVADO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)

July 31,

2011

January 31,

2011 (1)

July 31,

2010 (1)

ASSETS

Cash and cash equivalents

$128,781

$103,016

$54,326

Trade receivables

69,672

59,768

61,006

Inventories

196,611

181,265

205,787

Other current assets

32,461

30,541

46,679

Total current assets

427,525

374,590

367,798

Property, plant and equipment, net

37,308

38,525

40,521

Deferred income taxes

8,279

8,220

13,436

Other non-current assets

22,861

22,522

24,408

Total assets

$495,973

$443,857

$446,163

LIABILITIES AND EQUITY

Accounts payable

$22,363

$21,487

$19,902

Accrued liabilities

43,555

39,734

41,095

Deferred and current income taxes payable

456

1,328

545

Total current liabilities

66,374

62,549

61,542

Long-term debt

-

-

10,000

Deferred and non-current income taxes payable

7,169

6,960

8,013

Other non-current liabilities

18,362

17,869

20,707

Noncontrolling interests

2,458

2,280

2,001

Shareholders' equity

401,610

354,199

343,900

Total liabilities and equity

$495,973

$443,857

$446,163

(1) Effective February 1, 2011, the Company changed its method of valuing its U.S. inventory to the average cost method. The comparative consolidated financial statements of the prior year have been adjusted to apply the new accounting method retroactively.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Movado Group Inc's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.